Appeal dismissed over GMCA’s Renaker loans

Weis Group may have lost its latest case alleging that Greater Manchester Combined Authority’s authorisations of two loans totalling £120m to special purpose vehicles owned by Daren Whitaker were unlawful, but it has yet to give up the fight.

The Court of Appeal took on the case last year after the Competition Appeal Tribunal ruled that GMCA had not violated the 2022 Subsidy Control Act. The judge had said that the GMCA had actually acted in in a “perfectly rational and not inherently defective” manner when it came to the loans.

• READ MORE: GMCA wins Renaker loans tribunal but war of words continues

In a Court of Appeal ruling that was issued today, the judges stated that the CAT’s decision that the loans were not a subsidy was legally sound.

Issues around the process of how the loans were assessed and granted were not in the Court of Appeal’s jurisdiction. The judges noted that those would need to be evaluated through a judicial review, and not via the CAT case around whether the loans were a subsidy or not.

“It may well be that a public authority that fails to follow its own policies opens itself up to a judicial review challenge to the decision to give financial assistance to an enterprise, irrespective of whether it amounts to a subsidy,” Lord Justice Zacaroli said.

“That has nothing to do, however, with the 2022 Act, and any application would have to be made to the Administrative Court, as with any other judicial review of the decision of a public authority.”

However, Zacaroli did note that Weis’s arguments around the interest rates around the Renaker loans had merit.

Weis had argued that, per the GMCA’s own Investment Strategy, the loans should have been issued at 400 basis points because they went to SPVs that did not have a credit histories. The GMCA had opted to add only 100 basis points because the SPVs were owned by Whitaker and his history of development showed the creditworthiness of the SPVs.

Zacaroli pointed out that Whitaker had not provided a guarantee for these loans and that the GMCA had not conducted due diligence on his financial position.

“These are, in my judgment, well founded criticisms,” the justice said.

However, they were outside the realm of the case at hand, Zacaroli said.

Also not pertinent to the case, as it stood, was the Weis argument that Renaker had allegedly provided different viability assessments to the GMCA when it came to acquiring the loans and to Manchester City Council when it came to affordable housing provision. The justices did not look into this matter.

All three appeals justices agreed that the CAT’s ruling would stand. Weis has said that it is considering taking its case to the Supreme Court, or launching a judicial review.

Read the decision in full

The loans in question

The case centred around two loans in particular from the Greater Manchester Housing Investment Loan Fund, which is owned by the combined authority. The loans totalled £120m with an option to provide an additional £20m if surplus funding was available.

The GM Housing Investment Loan Fund was set up in 2015 with £300m as part of the devolution deal with central government. Interest from loans that are paid back is split between the combined authority and central government.

The money is then loaned out again. The fund has not been specifically designed to deliver fully affordable housing projects. The amount of surplus interest form the loans is believed to be capable of reaching £37m by 2028.

• READ MORE: GMCA publishes report into housing loans fund’s value for money

The loans that make up the Weis case were £60.7m to Trinity Developments (Manchester) and £59.3m to New Jackson (Contour) Investments – two special purpose vehicles owned by Whitaker, the man behind skyscraper developer Renaker.

Trinity Developments (Manchester) is the SPV for Trinity Islands, a scheme comprising four skyscrapers ranging from 39 to 60 storeys in height and providing 1,950 apartments. The project sits on four acres of brownfield land bordered by the River Irwell, Liverpool Road, Water Street, and Regent Street.

The loan was for the tallest of the Trinity Islands towers, which has 532 apartments. It has since been acquired by Starlight Investments and named Trinity Heights. Starlight purchased it and another Renaker building in a £500m deal in 2024.

The wider Trinity Islands project had an estimated £742m development value and a £652m development cost, according to a 2021 viability assessment produced by Renaker. This assessment can be found by reviewing the Trinity Islands application on the Manchester City council planning portal. The reference is 132429/FO/2021.

New Jackson (Contour) Investments is the SPV for Contour, a pair of 51-storey skyscrapers. The loan in particular was for one of these towers, which offers 494 apartments.

A 2021 viability assessment from Renaker puts the total development value of the wider scheme at £370m. The developer’s margin listed at the time at 10.98%. You can view this application by searching reference 132199/FO/2021 on Manchester City Council’s planning portal.

Neither project includes on-site affordable housing.

GMCA entered into a loan agreement with the SPVs on 22 November 2024, although the decision to approve was made in March of that same year.

A document justifying the interest rate of the loans was not published until after that March decision was made – and after Weis had sought records to justify the decision.

• READ MORE: Are GMCA’s £500m Renaker loans problematic or prudent?

A welcomed decision, says GMCA

A GMCA spokesperson said: “Today’s judgment from the Court of Appeal confirms the findings from last year’s Tribunal, which rejected the false claims that developers received favourable loans, and instead found that they were made on commercial  terms.

“Despite repeated legal challenges and attempts in the media to undermine our processes and our reputation, the court has upheld the decision of the expert Tribunal that scrutinised all our documents and stood behind the robust measures we put in place.”

The spokesperson pointed out that the GM Housing Investment Loan Fund had enabled the delivery of 11,000 homes.

“We welcome the additional clarity on legal guidance provided by the Court, which has today confirmed that our process was ‘designed to ensure that the GMCA acted on a commercial basis’.”

Questions have been raised, says Weis

Weis Group noted that it was “naturally disappointed” by the Court of Appeal judgment, however was buoyed by the court’s agreement over the interest rates were well founded and that there could be possible grounds for a judicial review.

“These are extraordinary findings and raise serious questions that go well beyond the two loans at issue in this case,” a spokesperson for the group said.

“The loans we challenged totalled around £120m,” the spokesperson continued. “The wider fund has advanced more than £1bn of public money, more than half of which has gone to SPVs ultimately owned by Mr Whitaker.

“Was the same flawed process followed across the rest of that lending? Was the correct interest rate methodology applied to other loans?”

They added later: “Nothing that the Court of Appeal has found has done anything to dispel the feeling that there was some form of cronyism at play here involving parallel viability assessments with differing forecasts on the profitability of these Renaker schemes.

“Our fundamental issue remains the wilful blindness of both the GMCA and MCC in indulging these activities.”

Weis has said it is exploring its options on whether or not to judicially appeal the Greater Manchester Housing Investment Fund loan approval process or to go to the Supreme Court.

The group is already preparing a judicial review into Renaker’s latest Great Jackson Street project – a series of five towers providing a total of 2,400 homes.